OBAC to O/Os: Protect yourself in writing

February 1, 2006

TORONTO, Ont. - For O/O Arthur Nowak, the numbers just didn't add up. He had been working at the same company for six years, when this past November, he found himself struggling to make enough money t...

February 1, 2006
by
Adam Ledlow

Categories

TORONTO, Ont. – For O/O Arthur Nowak, the numbers just didn’t add up. He had been working at the same company for six years, when this past November, he found himself struggling to make enough money to keep his truck on the road. Fuel prices were soaring, but the fuel surcharge he was receiving barely budged. Nowak confronted management about his problem and they assured they were passing on 100 per cent of the fuel surcharge to him and all other O/Os. Regardless, Nowak says he couldn’t keep operating under his current revenue scheme and he was forced to leave.

After leaving the company, Nowak spoke with his sister who owns a business in Toronto which happened to be shipping goods with the carrier he had been working for. To Nowak’s surprise, his sister told him her company was being charged well over what the O/Os were receiving, meaning Nowak had not been getting paid the full 100 per cent after all.

“What made me really mad was that management told all the O/Os on every occasion that they (were being) honest and we (were getting) everything,” Nowak said.

Another O/O who feels he is being taken advantage of is Mark Szewczyk. He feels his company is ripping off himself and other O/Os by not paying out the full price per load they’re owed. He says the company refuses to show what the actual loads are worth even though many others do.

Both Szewczyk and Nowak’s situations are ones that come up far too often, according to Joanne Ritchie, executive director of the Owner-Operators’ Business Association of Canada.

But what legal rights do both Szewczyk and Nowak have to take action against their respective companies? Are they simply at the mercy of their employers, forced to sit back and hope they’re not being lied to?

Unfortunately, according to Ritchie, there’s not much they can do from a legal standpoint.

“I think there’s a misunderstanding regarding this,” she said. “These are not legal or regulatory issues – these are business issues.”

When it comes right down to it, Ritchie said O/Os are running a small business and it’s up to them to make their own arrangements with the companies with which they contract.

“That business arrangement between the shipper and the carrier has absolutely nothing to do with the O/O,” Ritchie said. “If they need that fuel surcharge as part of their revenue scheme – and most of them do nowadays – it’s up to them to protect themselves with their own contract or their own arrangement with the carrier as to how that fuel surcharge is going to be paid.”

Ritchie said it should be stated in the contract how they’re going to be paid the fuel surcharge, either through having the carrier collect it from the shipper and passing it on to the O/O, or ideally, having the O/O simply state, ‘This is what my fuel surcharge is,’ much like a carrier would with a shipper.

“That’s how it would work in a perfect world,” she said.

But Ritchie warns to be wary of companies that aren’t prepared to show their paperwork.

“If I was an O/O, I would question a carrier who wouldn’t discuss it with me to make sure we both understood how it was going to work and have it in writing,” Ritchie stressed. “That’s what a carrier who is interested in working as a business partner would do. If a carrier is balking at that, you may want to reconsider whether you want to continue working for them.”

With regards to the price per load, if the O/O is working for a percentage, it should be clearly laid out in the contract what that percentage is (which may include the fuel surcharge) and in that same way, the carrier should be prepared to show the paperwork.

When calculating the percentage, Ritchie once again stressed the importance of O/Os viewing themselves as a small business. She said the ones who do this understand what their costs are and are more likely to be successful than other O/Os.

“(O/Os) need to know what they need to pay themselves in order to make a living and figure in their profits, and if they’re not going to be making a profit, forget it, go sell your truck and be a company driver or a greeter at Wal-Mart,” added Ritchie.

The notion of making the fuel surcharge mandatory, has been toyed with in the U.S. by OBAC’s big brother to the south, the Owner-Operator Independent Drivers Association, but the Bill eventually fell through. At present, the only way the issue would turn from business to legal is if a contractual arrangement concerning either the percentage or the surcharge was breached.

Ritchie encourages O/Os like Nowak and Szewczyk to cover themselves in their contracts and remember that most contracts are designed to protect the carrier, so drivers need to ensure they have the tools, the knowledge and the confidence before they sign anything.

“Not that they’re trying to screw the O/O, but that’s the carrier’s own contract. Many thousands of O/Os will sign that contract without even understanding what they’re signing,” she added.